GFI Hails Continued Progress on EU Anti-Money Laundering Directive

Council of the European Union Approves Text and Timetable for Directive, Including Crucial Measures on Beneficial Ownership Transparency

– Global Financial Integrity (GFI) praised the Council of the European Union for continuing today the EU’s movement towards cracking down on anonymous companies, a major conduit for laundering the proceeds of crime, corruption, and tax evasion.

The Council, which is composed of government ministers from each EU member country, agreed on a revised text of changes to the EU’s Anti-Money-Laundering Directive (AMLD), which will now return to the Parliament for a second reading and negotiations with the Council on final wording. The Council text retains the requirement, which the European Parliament overwhelmingly approved in March, that companies and trusts formed in every EU country disclose their “beneficial owners,” or the natural persons who ultimately own or control them, to a central authority.

“We strongly praise the Council for its movement to crack down on anonymous companies,” said GFI President Raymond Baker, a longtime authority on financial crime. “As our research notes, nearly $70 billion flowed illegally into or out of emerging EU economies in 2011. Anonymous companies are the number one tool for laundering the proceeds of crime, corruption, and tax evasion. Creating registries of the true, human, ‘beneficial’ owner of each company—as the Council endorsed today—is a common sense approach to curbing financial crime and the tremendous flow of illegal money.”

The move follows the United Kingdom’s declaration in April that the UK will create a public registry of the beneficial owners of all companies registered in the UK. Although the Council text does not require that every EU member country establish public registries, it does not bar any country from doing so.

“While the Council has confirmed their commitment to ensure that law enforcement is not stymied by anonymous companies, we would like to see beneficial ownership registries instituted and available to the public in every European country,” noted Heather Lowe, GFI Legal Counsel and Director of Government Affairs. “We encourage the European Parliament to stick to its guns and ensure that the era of anonymous companies is truly over in Europe by insisting that registries be public.”

The Council decision also sharply contrasts with the lack of progress in the United States, which despite a particularly poor track record of allowing anonymous companies to be formed and continued commitments to increase beneficial ownership transparency, has taken no concrete step towards doing so.

“The U.S. is the second easiest place in the world, next to Kenya, for someone to create an anonymous shell company to launder illicit proceeds,” stated Joshua Simmons, GFI Policy Counsel. “The White House has endorsed the need for legislation to ensure that beneficial ownership information on all U.S. companies is available (at least) to law enforcement, but momentum has been slow to build behind that commitment.”

“Bipartisan legislation has been introduced in both the U.S. House of Representatives and the U.S. Senate that would create registries of beneficial ownership information which would be available to law enforcement and could be made available to the public by U.S. states, but the Administration and Congressional leadership have been slow to push the issue,” continued Mr. Simmons. “Now is the time for Congress and the Administration to live up to their G8 and Open Government Partnership commitments by moving to pass legislation to protect the American people from criminals laundering their proceeds through the U.S. financial system.”